Customs, Excise and Gold Tribunal - Delhi
Central India Machinery Co. vs Collector Of C. Ex. on 7 September, 1988
Equivalent citations: 1989(19)ECC223, 1988(19)ECR288(TRI.-DELHI), 1989(39)ELT306(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Short question involved in this appeal is classification of the product described as "Bogie Centre Pivot Bold (Pin)" (hereinafter referred to as Pivot Bolt). The department contends that this is classifiable under the Tariff Item 52 as it then stood during the relevant period whereas the appellant contends that it is nothing but a component part of railway wagon and therefore, fell under Tariff Item 68 of the GET. It was noticed by the department that the appellant was manufacturing the goods since long but they had not brought to the notice of the department and had been using these Pivot bolts for captive consumption in the manufacture of railway wagons which were ultimately cleared on payment of duty. Therefore, a notice dated 14-10-1982 for demanding duty of Rs. 24933.12p for the period of October 1974 to 3-6-1982 was issued to the appellant company under Rule 9(2) of the Central Excise Rules for contravention, inter alia, of Rule 9(1). On adjudication, it was held by the Addl. Collector of Customs and Central Excise, Jaipur that the said product fell under Tariff Item 52. He also confirmed a demand for a period of 5 years prior to the date of issue of show cause notice. This demand has been later on quantified at Rs. 16404.12p. A penalty of Rs. 1000/- has also been imposed on the appellant under Rule 173-Q of the Central Excise Rules, 1944. tt is this order which is in appeal now before the Tribunal.
2. Learned advocate appearing for the appellant company, elaborating on the argument that it is a component part of the railway wagon states that a wagon has three main parts (i) the body which is used for carrying the goods (ii) the underframe or chassis on which the body of the wagon is built up (iii) the bogie or the wheel assembly which is fitted beneath the underframe or the chassis. He has also enclosed a copy of a drawing of the entire wagon and an enlarged drawing of the bogie or the wheel assembly. He states that the wheel assembly or the bogie is firmly fixed to the underframe or chassis of the wagon by two fasteners known as bogie centre pivot bottom and bogie centre pivot top. The function, however, of the bogie centre pivot pin or pivot bolt though no doubt, helping in holding the underframe and the bogie assembly together but does not fasten them together. Fastening implies rigidly holding the two bodies together and does not allow for any movement between the two bodies. In the instant case, however, the learned advocate submits, that the pivot bolt allows for swivelling effect of the wagon. This is done by the pivot bolt due to the fact that there is distance of some millimetres between the wall of the pivot bolt and the wall of the centre pivot top and the bogie frame. This relative movement between the walls of the underframe or chassis and the bogie or the wheel assembly is considered necessary for the smooth movement of the wagons over a curved railway track. If this movement is not allowed there may be possibilities of the damage to the wagons themselves or of accidents. He, therefore, submits that the pivot bolt's primary function is as component part of the wagon rather than as a mere fastener. Therefore, the product under consideration cannot be classified under Tariff Item 52. He relies for this proposition on Karnataka High Court's judgment in the case of Ideal Jawa [1986 (24) ELT 226 (Kar.)]. He also relies upon two decisions of the Tribunal in the cases of New Mangalore Engg. Co. Pvt. Ltd. [Order No. 746/1987-D dated 12-8-1987] and (ii) Ashok Leyland Ltd. [Order No. 848/87-D dated 19-10-1987].
His next plea is that the show cause notice cannot invoke a time limit of five years and duty prior to 14-4-1982 i.e. prior to six months from the date of show cause notice would be time barred.
3. Learned JDR appearing for the department, on the other hand, contends that the goods are described as bolt. Its appearance is that of a bolt. Size is of no criterion in determination of the fact whether it is a bolt or not. The technical write-up on which the learned advocate for the appellant company relies is hardly a write-up from a technical authority. No indication is there about the technical qualification of a person, namely Vinod Bhandari who has signed the technical write-up dated 9th July, 1988 addressed to Shri V. Sridharan, advocate. The write-up also indicates by way of a postscript as follows :
"If you approve this statement, I will send the same under signatures of our GM. Sd/lIligible)"
The learned JDR, therefore, states that no reliance should be placed on this technical write-up and the plea of the appellant's learned advocate that the pivot bolt allows for relative movements of the three parts of the railway wagon i.e. the body, the under-frame or chassis and the bogie assembly is not tenable.
He also submits that even if it is assumed that the pivot bolt allows for some relative movement to provide for swivelling effect of the wagon this is merely an additional advantage provided by the pivot bolt otherwise as the learned advocate himself states that the function of the pivot bolt is to hold together the bogie assembly and underframe or chassis. Holding together, according to the learned JDR, is nothing but fastening of the two aforesaid bodies. Therefore, according to him, the primary function of the pivot bolt is that of fastening and the classification of the product should be under Tariff Item 52. For his support the learned JDR relies upon the following citations :
(1) Simond Marshall Ltd. [1985 (22) ELT 378 Bom.]. (2) Collector of Customs Madras, v. Sundram Fasteners [1985 (22) ELT 923]. (3) CCE Chandigarh v. Purewal Associated Ltd. [1987(31) ELT 457 (Tri.). (4) Shri Ram Dass Motor Transport [1983 ELT 2067] and (5) Quality Sales Corporation, Ludhiana v. CCE Chandigarh [1986 (23) ELT 137-Tribunal].
On the question of time bar the learned JDR submits that the question of applying a period of six months for demand of duty does not arise in this case because the manufacture/appellant concealed the fact of manufacture of the pivot bolt from the department. Therefore, they are guilty of suppressing the fact of production and removal thereof for captive consumption in the manufacture of railway wagons. Period of five years has, therefore been rightly invoked by the adjudicating authority.
4. Replying, the learned advocate for the appellant submits that all the decisions cited by the learned D.R. are before the decisions of the Tribunal in the cases of New Mangalore Engg and Ashok Leyland Ltd. mentioned supra. These decisions of the Tribunal duly deal with some of the decisions relied upon by the learned D.R. In view of the latest decisions of the Tribunal piled by him, the learned advocate submits that the ratio of those decisions required to be followed in the instant case and it is, therefore, to be held that the pivot bolts fall under Tariff Item 68 and not under Tariff Item 52.
5. We have carefully considered the pleas advanced on both sides. We find that the adjudicating authority has merely gone by the fact that the product is described as 'bolt' and that it is also threaded as the bolts generally are. He has not taken into account the technical aspect now relied upon by the learned advocate during the course of hearing before the Tribunal. We, however, agree at the same time with the learned JDR that the technical write-up sought to be relied upon by the learned advocate cannot be called in the strict sense a valid one because no technical authority has given this write-up. Postscript in the write-up as extracted above, indicates that It sought the approval of the learned advocate before submitting it impliedly so as not to create any legal complication. Nevertheless, it is considered necessary that the technical aspect of the pivot bolts has to be gone into to determine the primary function of the product, as the case law cited on both sides indicates. If it is correct, as urged by the learned advocate, that there is no rigid fastening of the wheel assembly/bogie with the underframe or chassis of the wagon by the pivot bolt and some space is left deliberately to allow for the swivel effect of the wagon during the course of motion of the train, then the primary function of the pivot bolt will not be mere fastening but it will be as a component part of the wagon. If that be so it would fall under Tariff Item 68 as it then stood and not under Tariff Item 52. For this purpose we have to remand the case to the adjudicating authority to make further investigation into the issue whether pivot bolt rigidly/firmly fastens the two bodies together or not. The adjudicating authority to whom the case is being remanded would be at liberty to collect fresh evidence to arrive at the correct position.
6. On the question of time bar, learned advocate's plea is that since the goods were meant for captive consumption and the place of manufacture was not specified as required under Rule 9(1), there could be no demand of duty on such goods captively consumed. Since the place of manufacture had to be equated with the entire factory of the appellant and in that sense there was no removal of the goods, it is only by way of an amendment of Rule 9 on 20-2-1982 given retrospective effect from the beginning of the Rules, that demand of duty in this case could arise but he further urges that this demand could not go beyond the provisions of Section 11A as has been held by the Hon'ble Supreme Court in the case of J.K. Cotton Spinning and Weaving Mills [1987 (32) ELT 234-SC]. Now, Section 11A prescribes two time limits - ordinarily the time limit is six months for recovery of any duty but in cases where short levy or non-levy has arisen by reason of fraud, collusion or any wilful mis-statement or suppression of fact, or contravention of any of the provisions of this Act or of the rules made thereunder with an intent to evade payment of duty, the time limit gets extended to 5 years. It is admitted by the appellant that he did not declare manufacture of the product under consideration at any time to the Central Excise authorities nor had he been able to produce evidence that the manufacture was within the knowledge of the department at any time. In these circumstances, therefore, it has to be inferred that non-levy on this item has arisen on account of suppression of fact by the appellant and therefore, the time limit of 5 years as spelt out in Section 11A would apply in the instant case. The plea of the appellant, therefore, on the question of time bar is rejected.
7. The appeal is, therefore, allowed only to a limited extent by way of remand to the adjudicating authority for determining whether the pivot bolt fastens the two bodies rigidly or firmly and then decide the classification in the light of the observations made in para 5 above.